5 Reasons Subscribers Love Netflix's Latest Quarter

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Earns Netflix
Paul Sakuma/APNetfilx headquarters in Los Gatos, Calif.
Things are off to a great start for Netflix (NFLX) in 2015. The company served up 10 billion hours of digital content during the first three months of the year, and the stock hit a new all-time high after Wednesday's quarterly report.

Good news for Netflix has translated into great news for its shareholders, but consumers are also getting in on the fun. Let's take a look at some of the ways that a financially thriving Netflix translates into a better deal for its subscribers.

1. The Content Vault Is Getting Deeper. Netflix's subscriber base is growing. There were nearly 62.3 million streaming accounts worldwide at the end of March, up 13.9 million over the past year and a hearty 4.9 million through just the first three months of 2015.

Serving a growing audience is important, because Netflix invests some of that incremental revenue in more content. Netflix now has $9.8 billion in streaming content obligations, up from $7.1 billion a year earlier and $5.7 billion the year before that. That's the beauty of the scalable nature of digital delivery. Subscribers are major beneficiaries of a growing Netflix, giving them more movies and TV shows to watch.

2. Drawing More Anime Fans. Netflix said Wednesday that its next expansion market will be Japan. Launching in the island nation later this year may not seem like a big deal, but part of the art of rolling out in new markets is that Netflix often snaps up homegrown content to appeal to local audiences.

This isn't always a big deal for stateside subscribers, but it could open the door for Netflix to strike global content licensing deals for more anime and Japanese horror films that have proven popular with American audiences.

Another advantage to Netflix's booming growth overseas is that it's leading to subtitles being added to more of its content as a viewer option. We're a melting pot in this country, and you probably know someone that has difficulties with the English language and would prefer subtitles in his or her first language.

3. Streaming Will Get Safer. The world's leading premium video platform is beefing up its security. It will be moving its browsing and streaming experience from HTTP to Secure HTTP (or HTTPS). This may not seem like a major change. There aren't media reports out there of folks hacking into laptops and tablets streaming Netflix.

However, one can never be too careful in an age where so much streaming is done off of shared public Wi-Fi areas. Moving to a secure platform will also make it harder for Internet service providers or employees to monitor your viewing habits, even if one would think that Xfinity shouldn't care if you're streaming "Orange is the New Black" or not.

4. Getting to Know You Better Is a Good Thing. One of the neat things about Netflix is that it adapts to your viewing habits. It will offer up recommendations based on what you have watched or rated highly. Netflix plans to update its user interface for TV-based viewers later this year, and one part of the improved platform will be that it will get better about promoting Netflix originals to members that are most likely to enjoy them.

Netflix is taking this logical evolutionary step because it's not where it was two to three years ago when it had just a couple of new shows a year. It had little to lose to promote all of its offerings at the time, but as the catalog of Netflix exclusives grows it can afford to use its recommendations engine to serve up smarter picks.

5. The News Is Great as Long as You're Not Still Digging DVDs. The only part of Netflix's business that's going the wrong way is its DVD rentals. Netflix knew all along that streaming was the future, and shortly after DVD subscriptions peaked at 15 million the company was bracing the market to expect sequential declines in perpetuity.

We're now down to 5.6 million homes receiving Netflix DVDs and Blu-ray discs by mail. That is down from 5.8 million when the year began and well below the 6.7 million DVD accounts it was servicing a year earlier. This remains a very profitable business for Netflix, and there's no reason for the dot-com darling to abandon its legacy business if that continues to be the case. However, there will come a time when the base gets so small that it may become a logistical hassle to maintain. The good news is that Netflix's digital catalog will likely be so much larger at that point that it won't be much of a problem.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
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